Audrey Young: 6/10

Bill English's plan to return the country to surplus sounds good but feels flimsy.

It is based on heroic assumptions of a strong economic economy, high wage growth and and nothing going wrong.

He has banished all possibility of Murphy's Law - that what can go wrong will go wrong.


With the misfortunes New Zealand has suffered through events beyond our control, it is hard to have confidence that nothing will go wrong.

His plan is to get the books into the black by 2014-15. He could have given himself a little more flexibility and little longer. Instead he has created his own straitjacket.

It will be funded mainly through a combination of revenue raising, through a tax on KiwiSaver contributions and cuts in the public sector of $326 million a year for the next three years, as well as asset sales.

The Government will claim there is no new tax - just an existing tax exemption on employers' contributions being lifted.

It amounts to a new tax, however, and the Government collecting tax on something it didn't before.

If this Budget had a deep dark secret, it is that.

The Government may have correctly calculated that there won't be an outcry by savers: It will be relying on the fact that the impact of the lower total savings won't be actually experienced until the KiwiSaver retires.

Employers may complain about an extra 1 per cent they will have to pay on KiwiSaver from April 2013, but the tax on their contribution will not hit them.


The people who should be feeling very afraid right now should be public servants. The Government will save $650 million by requiring state sector agencies to fund the employer contributions to KiwiSaver employees over three years. That is on top of a target of $330 million in the same period on administration savings.

Those measures will cause the real slash and burn in this Budget. It won't be done by Bill English or John Key. You wont read about it in the Budget.

But departments will have to do it to themselves over the next three years.

Overall, the Budget rates a 6 out of 10. Its savings targets feel more like wishful thinking than realism and the Government has left the really hard decisions to the public sector itself.

John Armstrong: 6/10

Bill English's third Budget will stand or fall on one thing and one thing only.


For his and National's sake, the Treasury had better have got it right this time with its forecasts - that the economy really has stopped contracting and the recovery is finally under way.

If not, the Budget will be thrown back in English's face come election time.

Placing so much reliance on the Treasury is the kind of punt that most politicians would be very reluctant to make at any time let alone election year.

Even English has exhibited some scepticism, describing economic forecasts as "educated guesses".

He had better hope there is more "educated" and less "guess" in Treasury's rosy predictions.

Otherwise the the Budget will prove to be about as robust as a house of cards. If the economy remains moribund, then the whole Budget edifice - including National's claim to be the party of responsible economic management - comes tumbling down with it.


An awful lot hinges on the economy reaching the 4 per cent growth forecast - thereby producing the quicker than expected return to Budget surplus and a marked reduction in the $380 million New Zealand is borrowing each week, plus the enticing prospect of higher wages and tens of thousands of new jobs.

If the Treasury is on the button, then English will reap the commensurate boost in tax revenue required to get the Government's books back into the black and fulfil those promises.

While economists are now spotting shards of light penetrating the current economic gloom, they were saying much the same at Budget time last year.

Even the Treasury is wary, warning in the Budget fine print that while tax revenue is growing again, that growth remains weak.

English is certainly right about one thing. This is not your typical election-year Budget.

But don't be fooled. This Budget is still very much an election-year Budget.


It may not contain the traditional election-year lolly scramble.

It does contain things which people are not going to like once they work out how much they stand to lose from the chopping back of the Government contribution to KiwiSaver and what English says is the "relatively modest" cut to Working for Families entitlements.

Nevertheless, the Budget remains a highly-politicised document.

The message English wants the electorate to get is that fiscal miracles are possible. But only under National's stewardship.

Chuck National out and you chuck out any chance of the country getting out of hock.

The acid test for National now is whether English really can walk on water.


Fran O'Sullivan: 7.5/10

Bill English's "Blue Sky" Budget has no room for error if he is to get New Zealand's finances back into the black by 2015.

English's third Budget was geared at two vital constituencies:

First, the credit rating agencies which will want to see if the Budget numbers are achieved before the ratings are restored to pre-earthquake levels. English's determination to deal to the massive explosion of Government spending over the past six years is laudable. But it does not go hard and fast enough to warrant a ratings increase.

Second, New Zealand voters from whom the Key Government wants to extract a renewed mandate on November 26 to implement Budget changes to Working for Families, KiwiSaver and student loans.

The Government is also seeking voter support for the partial privatisation of state energy assets. Labour will decry this as "selling the family silver" but National will promote the "mixed member ownership model" as producing more investment opportunities for Kiwis to wean them off property investment.


The major caveat hanging over the Budget is the heroic growth assumption.

Getting "back into the black" will not happen unless Treasury forecasts - which include the growth rate peaking at four percent of GDP in 2013 - are achieved, This is predicated on the massive infusion of spending to rebuild earthquake savaged Christchurch. The big "what if" is "What will happen to this scenario if Christchurch's shaky foundations do not settle down again in time to fit the Government's quick-paced rebuilding timetable?". Forecast increases for tax revenue and job increases are also at the rosy end of the spectrum.

If the economy performs as well as Treasury forecasts in its optimistic projections, New Zealand will be back on the path to prosperity.